Clearly universalism is a hot subject amongst those on the left who concern themselves with such things. As the disagreement between Owen Jones & Sunny on the subject demonstrate.

Isn’t the simplest solution just to tax these benefits.

That way one gets to keep the universality of benefits like the winter fuel allowance but at the same time the sort of people who have savings of 500k get taxed at their marginal tax rate.

“First, there is no evidence for the view that these benefits keep up support for the universal principle”

There is lots, based on academic research across a wide range of countries.

http://www.jstor.org/discover/10.2307/2657333

John – anything for the UK?

I’d rather die that cut any benefits for anyone ever.

Dead serious.

Many people claim benefits such as financial help with housing. As a pensioner I agree with that; I have relatives who claim that. The taxation on my pension (£2000+pa)goes towards that. I receive the £200pa fuel allowance, occasionally use bus pass (in home county), and, as important, the tax I pay goes towards my grandchild’s education. I now own my house, but certainly don’t pay supertax nor have £500k+ of savings. Miliband will cause liberal, left-leaning folk like myself to look elsewhere on Thursday – god forbid, not Farage’s outfit……

A bit here, but most of this stuff is based on doing international comparisons rather than time-series within a single country.

http://dcpis.upf.edu/~gosta-esping-andersen/materials/welfare_state.pdf

It’s mostly international. A bit more here http://dcpis.upf.edu/~gosta-esping-andersen/materials/welfare_state.pdf

Why shouldn’t the people who’ve contributed the most to the benefits system not be able to claim them? That, to me, is the fundamental element of universal benefits that seems to be overlooked by those who oppose them.

There are some useful lessons to be learnt about universality from the Australian model – where welfare is concentrated on the poor, there is little universality and resentment of tax expenditure on benefits is widespread. There’s an interesting podcast from Australia Radio National here: http://www.abc.net.au/radionational/programs/rearvision/australia27s-welfare-state/4379252

There’s certainly merit in starting to prepare people under 50 for the prospect of a flat rate subsistence pension kicking in at 75 or so. The demographics are really quite scary.

Just a small factual point: pensioners outside of London get a free bus pass & discounts on rail fares for off peak travel. My Mum (in West Yorkshire) used to be able to travel anywhere on the train for 50p, but that was changed in 2011 to half the adult fare. So to say “people outside London don’t get a freedom pass” is a bit misleading as they do get free/discounted travel although not the same as the Freedom pass.

Is there any evidence that Winter Fuel Allowance is actually spent on energy?

There is a deep philosophical flaw in any argument supposedly based on a concept of fairness that requires bribery to make it popular. An argument should be able to stand on its merits without recourse to bribery. When people appeal to universal benefits as a vehicle to get support for other benefits, that is prima facie evidence that they lack confidence in the validity and strength of their arguments.

What is the left’s case for welfare benefits for those who can’t support themselves? They believe everyone should have a minimum standard of living because that would be fair. So fairness should be the central argument and not lets bribe everyone with their own money and hope they don’t notice. It is the deceit around welfare that helped cause support for welfare to drop over decades. The politicians that allowed the public to believe they were contributing to a fund, whereas all they were doing was financing current spending. That was deceitful and why some parts of the public connect in a negative way benefits with immigration. How often do you hear people quote how many years they have contributed to the system. Yeah, and most of the people who benefited are now dead.

Whether a policy is good or bad is neither here or there as long the arguments are presented openly and honestly. Benefits for affluent pensioners is symbolic of dishonestly over many years.

@ Shinsei

“Isn’t the simplest solution just to tax these benefits.”

It’s a bit backasswards. I see what you’re saying, but setting up a system to give people money, then another system to take some of that money away again, seems like a great way to waste money overall on all those redundant systems.

I’m not a higher-rate tax payer but I’m very content to give up my freebie TV licence now that I’m approaching 75. As I don’t own a digital TV set and don’t watch TV, it really won’t be any hardship.

@12

Tax credits?

@12. Chaise Guevara: “I see what you’re saying, but setting up a system to give people money, then another system to take some of that money away again, seems like a great way to waste money overall on all those redundant systems.”

Unified tax/benefit provision has been progressing for years, accelerated under New Labour. It’s more efficient and deserving recipients are more likely to get what they need. But it still costs £350 to process a tax form and a smidge more every time that it needs to be reviewed.

Not taxing people is really good.

I’m inclined to favour the Shinsei1967/Vince Cable compromise – make these benefits taxable, like the state pension itself.

I can’t attach any significance in terms of this debate to a graph labelled “% agree government should spend more on welfare benefits”. When most people think of “welfare benefits”, they think of means-tested/targeted benefits like JSA and Housing Benefit – not universal benefits like Child Benefit, the state pension and Winter Fuel Allowance.

Show me a series of graphs demonstrating that public support for specific universal benefits has declined in the same way as support for specific targeted benefits and I might be persuaded.

If you want to see what happens to specific benefits when they go from being universal to being means-tested, there’s a fascinating case study going on right now. Just three years ago Child Benefit was a universally cherished benefit paid on behalf of every child, rich or poor, and with a long history of rising at least in line with inflation every year. Then the Coalition announced it was being withdrawn from high earners. It’s been frozen ever since and the voices demanding that it should be restricted to (e.g.) the first 2 children in a family, lest it encourage the poor to breed excessively, have been getting louder ever since.

Remember this?

https://liberalconspiracy.org/2010/11/25/tory-peer-cuts-will-make-poor-breed/

That was how it started. Now it’s OK for the mainstream press to suggest that if you pay Child Benefit to poor people willy-nilly, it makes them set fire to their kids.

@ Chaise @ 12

“setting up a system to give people money, then another system to take some of that money away again, seems like a great way to waste money overall on all those redundant systems.”

But the alternative – setting up a system to work out how much money to give people, based on how much they already have – is no simpler. And it means many people miss out on money they’re entitled to, as with Pension Credit, for instance. ‘Hand it out and claw it back’ is the simplest way to get support to everyone who needs it, while ensuring that better-off people continue to make an appropriate *net* contribution to the system.

We have been here before. What is a “wealthy pensioner”. How is “wealth” defined?
Living in a large private house, but having only a state pension as income, can hardly be described as “wealthy”. On the other hand, a couple living in private or social rented accommodation, both drawing state pensions and where perhaps one of the partners has income from an occupational pension plus a private pension, would have a far larger disposable income than many. Clearly there would have to be some means of comparison (more expensive bureaucracy) between individuals and arbitrary cut off points (creating anomalies and discrepancies) to manage the “new” policy. This of course introduces only one thing. The “Means Test”. This pernicious intervention into people lives has been an anathema to the labour movement, and to many other parts of society for decades and I believe would not be an acceptable measure for receipt of bus passes or winter fuel allowance.

The OP assumes that wealthy people all take the benefits they are allowed. The first question to ask must surely be how much money we are talking about here? The end to universalism would damage benefits more widely and further erode the welfare state. Taxing the benefits may recoup something from the wealthier but would lead to pressure for changes to either the taxes or benefits of the less well off.

Suggesting pensioners find work or stay in work longer makes it even harder for young people to start work, which is the greater problem.

Retention of wealth generated in the UK and making those who can afford to pay more taxes do so must be the first priority. Too much money goes to too few people or is whisked off to tax havens.

@Chaise & others.

Yes, it would seem silly to give people benefits and then “set up another system” to take some of it back in tax. But we already have this “other system” up and running – it’s called filling out your annual tax return.

The sort of pensioners who have 500k in the bank or investments will already be filling out a tax return. And declaring to HMRC their work pension income, their state pension income, their bank interest, the rent on their holiday cottage etc.

Why not just get them to add the £200 fuel allowance and £100 free bus pass to their tax returns and pay the 25% or 40% tax on these.

@ Cherub

“Taxing the benefits may recoup something from the wealthier but would lead to pressure for changes to either the taxes or benefits of the less well off.”

I’m not convinced by this. The state pension itself is taxable, but I’m not aware of any resulting pressure to change taxes or benefits for the less well-off. Arguably there’s some resentment of people who get Pension Credit (‘I paid into a private pension to top up my state pension and these people are getting it topped up for nothing!’), but that’s means tested and *not* taxable.

How many pensioners have incomes over £150,000 or savings (I assume you mean ex housing) of over £500,000?

Removing benefits from those people would save nothing.

You don’t have to have a half-baked opinion on everything!

I wish I could find a knock-down graph demonstrating that public support for universal benefits has remained higher than support for targeted benefits, but I can’t right now. So I’m going to have to settle for stating the bleedin’ obvious:

When politicians have increased the value of universal benefits (the state pension, child benefit), they’ve tended to shout about it in the expectation of public support. When there’s been a perception that those benefits are under attack or withering away, they’ve found themselves on the back foot, having to defend their actions. (Remember the ‘insulting’ 75p rise in the state pension?)

In the case of targeted benefits (JSA, housing benefit), the situation is reversed. It’s when politicians *cut* these benefits that they shout about it in the expectation of public support. It’s when there’s a perception that those benefits are *rising* that they’ve found themselves on the back foot.

@Chaise

Isn’t the counter argument that universal benefits are overwhelmingly cheaper to administer.

And means-testing inevitably introduces higher marginal effective-tax rates.

So it’s much cheaper, cleaner and more transparent to have universality and use the tax system to recycle the cash from those that don’t need it.

I wish I could find a knock-down graph demonstrating that public support for universal benefits has remained higher than support for targeted benefits, but I can’t right now

See the graphs on the blog-post I link at the end. In short, people support the benefits they get… but this idea that we can get support for some benefits like JSA because we offer pensioner benefits doesn’t work.

So I’m not clear why we’re offering benefits to rich pensioners, when the money could be better used for other benefits. Not all benefits will be universal anyway.

@ Sunny

“this idea that we can get support for some benefits like JSA because we offer pensioner benefits doesn’t work.”

This is where I’m confused, I think, because “this idea” is not one I’ve ever heard expressed. The usual claim made in support of universal benefits/services is that they command higher public support than targeted benefits/services, and hence tend to stay higher value/higher quality in the long term. Hence the argument on something like the free bus pass or Winter Fuel Allowance would be that *those very benefits* are more likely to retain more support, and so be protected from cuts etc., if they’re universally available rather than targeted at ‘needy’ pensioners – not that their universality is somehow going to win support for other, targeted benefits like JSA.

There are also administrative costs associated with either determining who should get benefits or who should be taxed on them.

If these admin costs outweigh the ‘savings’ made by denying universal benefits to people who don’t need them it’s a false economy.

2) I’m for universal benefits. All I’ve said is that I’d like the focus on other kinds of benefits rather than cash hand-outs to rich pensioners. So why are people saying that means-testing these pensioner benefits will undermine universal social security?

Because means testing and universality are mutually exclusive. Your argument makes as much sense as saying you are in favour of ‘universal’ human rights – except for people who don’t deserve them.

Do you actually know what universal means?

See the graphs on the blog-post I link at the end. In short, people support the benefits they get…

That’s just nonsense: people support getting benefits themselves but even those getting JSA, ESA, whatever, themselves tend to think other people getting those benefits are scroungers. Most people would risk losing benefits themselves than risk other people getting benefits they don’t deserve.

Look at the campaigns at the last election: parties in Scotland claimed more people claimed more people in Scotland were claiming benefits than paying tax. If that was true and people were more concerned with preserving their own benefits than preventing other people getting those same benefits then that argument would be counter-productive.

“If these admin costs outweigh the ‘savings’ made by denying universal benefits to people who don’t need them it’s a false economy.”

You also have to factor in the costs of increased health and social care caused by pensioners turning the heat down (just because they are classed as wealthy doesn’t mean they won’t reduce consumption as a result of loss of the payment), using public transport less (meaning social isloation and reduced independence) and so on. Plus the effect on the local economy of pensioners having less money.

Usual IDS ill thought through publicity stunt

Incidentally, the scrounger rhetoric doesn’t seem to be being applied to this group by anyone.

They need some convenient epithet.

How about, “Not needy, greedy”?

Keep the universality and simply tax richer pensioners more.

@ Shatterface

“Because means testing and universality are mutually exclusive.”

I think this is overstating things a bit. The model for tax credits under Labour was “progressive universalism”: virtually every family with children received *some* tax credits (so in that sense the benefit was universal) but the amount awarded was based on a means test, such that it tailed off as you went up the income distribution (so in that sense it was progressive). Arguably that model offers the best of both worlds: it allocates limited resources in a progressive way, based on need, while avoiding an “us and them” distinction between contributors/’strivers’ and claimants/’scroungers’.

The two sectors of state spending that have best retained popular support are the NHS and State education. I don’t think it’s a coincidence that they are also the two that have the highest levels of middle class participation and engagement. Social workers would probably also agree that the relative power of your client base tends to correlate positively with the the regard in which you are held by the general public. So it stands to reason that a wide welfare net, to some extent supports all welfare. The problem with this line of argument though is the definition of “rich” used to exclude groups from welfare receipt. Some – generally on the left – seem to believe this is anyone who isn’t largely reliant on benefits and would cut welfare/raise tax from pensioners who would not class themselves as rich, and feel that as lifelong taxpayers they have a legitimate entitlement to some of the perks enjoyed by their predecessors.

@17 I couldn’t disagree more. The take with one hand give with another mentality of the last 2 years of labour government undid them, it made working people feel like they on welfare and, worse, effectively dictated how their own money should be spent (if you had kids, on childcare). The effect of tax credits could have been far more simply and easily achieved by the mind bogglingly simple expedient of a transferable tax allowance.

Isn’t it really an argument for a citizen income according to need? If you want more, work (& be taxed accordingly) – only asking there…

@DerekHattonsTailor:

“The two sectors of state spending that have best retained popular support are the NHS and State education.”

I’d question that. The NHS certainly. However 7% of the population actively exclude their kids from the state education system and voluntarily spend a lot on an alternative private system. And there is plenty of media criticism of the poor education outcomes of a significant minority of UK children.

Instead I’d suggest the Old Age Pension as having huge popular support. As “everyone” benefits from this (or will benefit from it when at right age). It’s also teh reason why even in the currentausterity the Old Age Pension rose at 5.1% last year (in line with inflation).

Of course the fact that old people are the most active voters has nothing to do with trying to keep them on side !

@ George

Isn’t the counter argument that universal benefits are overwhelmingly cheaper to administer. And means-testing inevitably introduces higher marginal effective-tax rates.

So it’s much cheaper, cleaner and more transparent to have universality and use the tax system to recycle the cash from those that don’t need it.

@ Dissident

Isn’t it really an argument for a citizen income according to need? If you want more, work (& be taxed accordingly

Hurrah!!!!

Two people get it, and it was there all the time!!!

http://en.wikipedia.org/wiki/Basic_income_guarantee

@ Derek Hatton’s Tailor (33)

“The take with one hand give with another mentality of the last 2 years of labour government undid them, it made working people feel like they on welfare and, worse, effectively dictated how their own money should be spent (if you had kids, on childcare).”

I’m not sure what it is from ‘the last 2 years of Labour government’ in particular that you’re thinking of; tax credits were introduced around the year 2000 and, although they played a particular role during the recession (e.g. topping up the incomes of people who found themselves working reduced hours), I don’t think anything fundamentally changed at that time. Nor was it ever dictated that child tax credits had to be spent on childcare (although the amount of tax credits you got did partly depend on your childcare costs).

“The effect of tax credits could have been far more simply and easily achieved by the mind bogglingly simple expedient of a transferable tax allowance”

Sorry, but this is flatly false for at least three reasons:

1) Some of the households receiving tax credits are on incomes too low to make use of even one person’s tax allowance.

2) The amount of tax credits to which some households are entitled exceeds the *total* amount of income tax they pay, let alone the amount of income tax they pay on the £5,000 or £10,000 chunk of income you’re suggesting could be made tax free (depending on whether we’re talking about the personal allowance c. 2000 or c. 2013).

For instance: my household’s first tax credit award, at a time when we were living on one lowish full-time income (£14,000), was c. £4,000 a year. If I’d been able to use my wife’s personal allowance instead – £5,000 or so at that time – that would have left us better off by only £1,000 or so.

3) Some of the households claiming tax credits include two working parents, each making full use of their personal allowance, and so there’s no question of an unused allowance being transferred to the other partner.

And those same factors would lead to perverse outcomes in terms of who did and didn’t see any benefit. E.g. assuming a £10k personal allowance, every single-earner household on £20k plus would be £2k better off – including those on high incomes of (say) 50k plus. But the benefits would tail off as you went down the earnings scale, so that a single-earner household on 15k got half that amount and one on 10k or less got nothing.

“However 7% of the population actively exclude their kids from the state education system and voluntarily spend a lot on an alternative private system”

I suspect they still support the principle of state education – just not for their own kids. Plus where there is a good state school nearby (or what is locally perceived as a good school), the private sector tends to be less popular. Where I grew up only 1 private school existed as the other two had to close due to the proximity of good schools in the state sector. By definition almost, a private school that is worse than the state will close (this is why the argument about the private schools being better than state schools is rubbish – of course it will be! a bad private school will go out of business very quickly because there is always a free alternative)

“Why shouldn’t the people who’ve contributed the most to the benefits system not be able to claim them?”

Because, Barb, the NI Contributions system isn’t and has never been a nest-egg savings account: the whole idea is that those who can, CONTRIBUTE something, so that people who can’t can HAVE something.

The notion that it’s a piggy-bank for well-off OAPs – who don’t need the help that the benefit system is intended to provide – is wrong-headed to the point of being offensive.

@ Pagar

Do multimillionaire rentiers work? Do people who inherited daddy’s mega bucks work? Yes or no… (I don’t care, get the goddam job done/greasing a politicians palm doesn’t count as work btw)

@ Keith Reeder

“the NI Contributions system isn’t and has never been a nest-egg savings account: the whole idea is that those who can, CONTRIBUTE something, so that people who can’t can HAVE something.

The notion that it’s a piggy-bank for well-off OAPs – who don’t need the help that the benefit system is intended to provide – is wrong-headed to the point of being offensive.”

Well… it’s certainly the case that the NI model has never been of a personal savings pot from which you get out what you out in. But plainly the system *was* set up, from the start, to provide well-off OAPs with financial help they don’t need, just as the NHS was always intended to provide free healthcare to people who don’t need it, the state education system was always intended to provide free education to people who don’t need it, etc. The focus on financial need as the basis of entitlement is part and parcel of a right-wing view of welfare services as a safety net for the poor that is wholly at odds with the vision of a comprehensive welfare *state* providing a whole range of services and benefits to rich and poor alike in return for an appropriate contribution from everyone who can afford to make one.

I really like the article and its conclusions.

I think those defending universal pensioner benefits are just looking at this particular issue in isolation rather than as part of the wider welfare policy mix.

Currently with the benefit caps working families are going to lose average £165 per year and it will disproportionately affect those on lower earnings. Yet millionaire pensioners will continue to get winter fuel payments and free bus passes. That cannot be fair, nor can it be justified.

Similarly, in our society 1 out of 4 children live in relative poverty which is a disgrace.Out of these, a large percentage (62%) come from families where parents work.

This is where David Miliband made a good point during the debate on welfare in the House of Commons: He said that he accepted the overall affordability argument laid out by the coalition – ie 30p out of every £1 spent by the government is spent on welfare and that is unsustainable and was happy to support an overall cap.

However, he argued that the government failed to have the real debate on “priorities” within that overall cap to ensure the system is fairer. Funny not many Labour MPs and others have taken that argument forward.

Can we as a society say it is fair for millionaire pensioners to get money for their electricity bills while one out of four children are growing up in poverty.

There are opportunity costs in all public policy decisions but I would rather make an error on trying to make lives better for poorer children than millionaire pensioners despite their votes.

Btw, well done Sunny for at least making the argument that universal benefits need to be looked at.

@ Shamit

“Currently with the benefit caps working families are going to lose average £165 per year and it will disproportionately affect those on lower earnings. Yet millionaire pensioners will continue to get winter fuel payments and free bus passes. That cannot be fair, nor can it be justified.”

It seems so obvious, doesn’t it? (And of course we *do* have to make decisions about where limited resources get allocated, and we *can’t* make sacred cows out of particular universal benefits. I get that.)

But just think how easy it would be to apply this sort of ‘common sense’ argument to any of the pillars of the welfare state:

“Many pensioners have never earned enough to pay into a private pension and are struggling to make ends meet on an inadequate state pension (and related benefits). Yet millionaires who can easily afford to build up huge private pensions still get thousands of pounds a year from the state when they retire.”

“School budgets are stretched and many disadvantaged children aren’t getting the extra tuition and high-quality learning environments they need. Yet millionaires who could easily afford to educate their children privately are still being offered free school places at a cost to the taxpayer of £6,000 a year.”

“The NHS is struggling to cope with the demands of an ageing population and to provide people with the high-quality care they deserve. Yet millionaires who could easily afford to fund their own healthcare privately are receiving unlimited free, taxpayer-funded care on the NHS – sometimes worth hundreds of thousands of pounds over their lifetimes.”

The Tories would be drooling at the thought that arguments like these – ‘common sense’ arguments in favour of ‘targeting help at those who need it’ rather than ‘using limited resources to subsidise the rich’ – could start winning popular support. Because they lead inexorably to a right-wing, low-tax, small-state utopia: a state-funded safety net of welfare benefits and state-funded services for the poor; private education, healthcare and pensions for the rich; subsidised healthcare, education and pensions for people in the middle; and lower taxes all round.

…with the net result being, of course, that the value and quality of state-funded services and benefits goes into long-term decline, hitting the poor hardest (‘services for the poor end up being poor services’); the rich end up laughing all the way to the bank because the tax cuts they’ve received more than cover the additional costs they incur (if they incur any – i.e. if they weren’t already paying for private healthcare, education etc.); and people in the middle suddenly realise how little a three- or four-figure tax cut actually amounts to when weighed against the cost of big-ticket items like healthcare, education and pensions.

I know the world is not going to collapse just because WFA is withdrawn from better-off pensioners; maybe that *should* happen. It’s just one minor benefit after all. But I think it’s worth looking at the bigger picture and considering just where these ‘common sense’ arguments might lead us.